Assume That You Are Embarking on a Test of the Small-Firm

question 15

Multiple Choice

Assume that you are embarking on a test of the small-firm effect using APT. You form 10 size-based portfolios. The following finding would suggest there is evidence supporting APT:

• A) the top five size-based portfolios should have excess returns that exceed the bottom five size-based portfolios.
• B) the bottom five size-based portfolios should have excess returns that exceed the top five size-based portfolios.
• C) the ten portfolios must have excess returns not significantly different from zero.
• D) the ten portfolios must have excess returns significantly different from zero.
• E) none of the above.

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Definitions:

Racial Inequality

The unequal treatment or perceptions of individuals based on their race, leading to disparities in wealth, healthcare, education, and employment among other sectors.

Grandfather Clauses

Provisions that allowed individuals to bypass literacy tests, poll taxes, or other barriers to voting if their grandfathers had been eligible to vote, effectively disenfranchising many African Americans.

Enfranchised

Granted the right to vote or provided with a privilege, service, or access that was previously restricted.

Civil War

A war between factions or regions within the same country, often driven by political, ethnic, or religious disputes.